Fernando Samaniego - International New Media Consulting

Radical New Live TV Content Needed

TV is evolving fast. Is programming following?

While most TV content can be time-shifted, some programs lose their interest when not viewed live.  News and sports are obvious examples, as opposed to Titanic or Friends which can be watched years afterwards.  The Olympics, the Super Bowl, the FIFA World Cup and the Cricket World Cup are but some good examples of events coveted by TV networks, but they are scarce and expensive. Besides, successful as they are, there is still a part of the population who doesn’t watch them.

The TV industry desperately needs programs to be watched live in order to remain relevant to audiences and advertisers, and that explains why it shells out large amounts of money to third parties for broadcast rights.  But despite that, the broadcasting industry doesn’t always control the characteristics of the final product which in some cases do not favor its audience and revenue goals.  The alternative to producing its own content to obtain equivalent ratings is way beyond its means. Producing and marketing such a new program would be too costly for any single network. 

The very essence of TV

As the medium has become more mature and as other media are eroding into the TV business, broadcasters understand that the very essence of TV, that which makes it excel over all other media, is the ability to generate very large audiences around live events.

If measured by percent of households watching a program, from 2000 the first 12 positions in the US are occupied by sport events (100% football), and sports take 16 out of the first 20 slots.  The finale of Friends (2004) and Survivor (2000) take 13th and 14th positions. Two Academy Awards (2000, 2004) are the other exceptions. But, truth be told, this clear dominance of sporting events was not so clear in the past, where series finales (M*A*S*H in 1983, Dallas in 1980, Roots in 1977) or even films (Gone with the Wind, twice in the list with parts I and II in 1976, The Day After, 1983) were high on the listings.  

The previous information illustrates that live events have become the best possible weapon for the TV medium to claim its social and commercial role and all indicates that the future will follow suit.

The Super Bowl Event

The undisputed king of sporting events in the history of US television was able to attract 106 million viewers in 2010, forty three years after its first celebration. Since it goes beyond a football match and features serious entertainment, it is usually held in the southern states for better weather (first Sunday of February).  It explodes into thousands of Super Bowl private parties where people get together to watch it and have fun. Quite an event!  Still, even though some people talk about the Super Bowl ‘Week’, it lasts just one single day, usually the most important from the US audience viewpoint (share 68% in 2010). Just one day.

The Big Four (Fox included) have been alternating ownership of rights for the event, which means that it does not belong to any one broadcaster, that they cannot count on it to build their brands, to build loyalty.  They just write a fat check and try to maximize the expensive event in a short time and with a series of inflexible limitations.  To make things worse, the cost of rights is increasing.

Is there an Alternative?

Creating a new large event to obtain 50%-type share is not a light issue.  In the case of the Super Bowl, it relies on decades of tradition, on the NFL league, and on the traction that the sport has in the United States thanks to high school, college and professional football. In other sporting events the situation is similar; a strong organization has put together a powerful show and the broadcasting rights are sold to the networks which struggle to recoup their investments.

What is the alternative, apart from ignoring those large events?  To build one would not be a natural step since it’s not in the broadcasters‘ DNA to do it and because producing and launching a new large event could be prohibitively expensive. Still, the need to attract huge audiences to watch live programming is there and, if anything, its importance is increasing as other TV products lose relevance.

Sharing the Burden of New Live Events

Personally, I do not consider it impossible that a channel or an association of networks from different countries where one channel leads the project will try to put together a new product to replicate the effect of large sporting events. While the benefits could be huge, the risks are big too, but sharing them would help because owning a successful event and exploiting it in “a pure TV way” would represent tremendous traction for the winner, an almost insurmountable competitive advantage.  Difficult as it may be, I estimate that international cooperation would be required, since it could spark interest in more than one single market.  Beyond that, some kind of external financial involvement may also be required. As financial products are becoming more specialized, a tool for hedging this type of 'hit or miss' investment could be created. 

Last, and in order to obtain some extra public recognition, the investment could be open to small private investors like you and I along the lines of ‘box office trading’ being approved by the Commodity Futures Trading Commission by which a market for trading on predicted box office receipts Trend Exchange. Perhaps that could be combined with a simple online investment tool by which the project is accessible to individuals who would never invest in something as complicated for them as a Futures Market.  After all, the objective is to create notoriety through any possible means which makes the project known to possible audiences.  Let’s be honest, who hasn’t dreamt of getting the free promotion Apple products receive?

Concepts about the Program

Such an event would probably extend over a series of weeks, during which the audience warms up and grows virally to gain the critical mass required for it to be an absolute ratings and revenue success.  I am far from being an expert in TV programming but when I think about it I imagine an event based on proven patterns of war-like dynamics, as in sports: one person, or one team, against others, all in real-time and where the rewards are big. Well known/promoted players struggle to be the winners.  Their effort would be brought closer to the audience thanks to lots of camera close-ups, and to new indicators up to now unavailable to sporting events: heart-rate monitoring, chemical stress markers as well as any other physical or psychological indicators, constantly compared to the adversaries’. But, to be honest, my vision of the program is irrelevant.  What really counts here is that a radical new type of content may be on the verge of creation.

Conclusion

TV programming has to come up with radical new ideas:  decreasing audiences, time-shifting, the desire of advertisers to reach large amounts of consumers simultaneously and perhaps in a more meaningful way...etc.  Broadcasters have to go back to the very essence of the TV experience, the relationship with the viewers in real time (to keep it simple I have overlooked the mobile and online implications). 

Something is going to happen, and it will not be 15 years from now, when the networks could be too small to do it.  Big Brother or American Idol were great formats, but innovation has to go on.  Mix the introspection of Big Brother with the passion of sports, add new technical features and we may have a brand new type of programs, involving a new financial architecture at the service of radically more ambitious goals.  They will be shown live in several markets and the audience will be able to see the (outside) performance while almost getting inside the performer. 

In the battle for viewers, one player may decide to up the ante and explore radical new ways of attracting large audiences.

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Newspapers and TVs Could Learn from the Music and Movie Industries (and Part 2)

On free content

 There is a similarity between the music industry and newspapers in regard to their content. Songs in their basic form are considered by many individuals as free merchandise, the purpose of which is to attract attention to the artist. This belief is reinforced by the artists themselves, by those who are generally less traditional and more innovative in their approach. Take Lil Wayne, ho received the Grammy’s Best Rap Album, for example.  He built his fan base by freely giving hours and hours of his music away.  The surprise is that, in spite of that, his ‘Tha Carter III’ album was the top-selling album of 2008.  In this case, giving away content and being the top seller were not alternative strategies.  I am sure his success will inspire others.

Similarly, I believe newspapers will have to attract their readers/users by giving away ‘good’ content while charging for other content that the audience perceives both costs the company and is useful for their lives or their small businesses.  Basic news (at least the commodity part of it) will remain free despite all the buzz, while special reports and differential content/services will follow a different track.  Fighting the perception of the users is always a risky mission.   After all, as Tony Wadsworth, former head of EMI for a decade, says ‘The development of technology has meant music” (you can substitute by ‘news’)  “is consumed in more places in more ways than ever before – that is a great thing...; the future business model of this industry might not be based on transactional music sales for much longer. In the space of a year, the proportion of income derived from other sources – live gigs, merchandising, advertising, digital licensing, broadcast – has grown from 11.4% of total revenues in 2007 to 18% in 2008”.  To continue with the parallelism, newspapers may have to obtain new sources of income by fulfilling new tasks in their communities.

Cherry Picking

Another similarity between music and news lies in the fact that in the past you had to purchase the whole product even if you just wanted a single song in the CD or just the classifieds section of the newspaper.  In the digital world you can choose to acquire a single song and not pay for the unsolicited merchandise.  One study says that iTunes-like platforms have cost the music industry more than piracy!  We may not like it, we can even say that the user is losing the opportunity to discover unexpected jewels in the package…but the fact is that unbundling is the increasingly preferred option and fighting it is useless.  As music is consumed digitally, mixed bundles may be losing their appeal.

Likewise, newspapers may end up charging for specific pieces of content when it’s clearly justified in the eyes of the user.  Deciding when to charge or not requires a lot of trial and error as well as sufficient internal expertise in analyzing that information.

“Publishers for the most part have already begun preparing as if this process [unbundling] is irreversible. They are implementing new ways to replace revenues that are lost when customers no longer buy the whole ‘package’. This new repackaging can take many forms. Subscriptions to popular online journals, such as the New England Journal of Medicine, increasingly offer unique features, including email alerts, user communities, access to unique data sets, and multimedia content designed to make the value proposition of buying the “whole package” greater than the sum of the parts.” Nothing to add.

Conclusion

The music industry has taken too long to learn new tricks and has lost big revenues in the process.  Newspapers can learn from the ability of the most adapted labels how to diversify revenues, to relate differently with their environment and how to reach audiences less with recorded content and more with live gigs. Faced with a transformation of this magnitude, change has to affect all and every single area of the company (yes, even accounting) and the profile of the professionals has to evolve.  Changes should not be done in one day, but on the other hand, wasting time with excuses is not an option.  As I said in a previous blog, save money in legacy activities and invest in exploring new avenues of income.

From the movie studios, newspapers and conventional TV channels should imitate their ability to move (relatively) fast while not discarding any possible way of reaching clients.  After all, all legacy content industries share the same basic challenges and the logic of any responses to them.  

You are free to use this article in your publication as long as you credit the author Fernando Samaniego

Newspapers and TVs Could Learn from the Music and Movie Industries (Part 1)

One decade at a time

One could argue that the perfect storm now affecting the Media and Entertainment industries started around 1982, when the first music CD was sold.  But it was in 1985 that CD began to gain popularity in the larger popular and rock music markets (Dire Straits’ album Brothers in Arms was the first one to sell a million copies).  At that moment, consumer content became digital. Later on, the compressing capabilities of MP3 and the extension of the internet greatly facilitated file sharing.  

As I wrote in a previous post, it was some 10 years later that another digital birth took place that would soon affect the placid businesses of established newspapers.  It was Craigslist and its ability to volatize classifieds’ revenue. Lastly, 10 years later, a pre Google YouTube was launched and the lives of incumbent TV channels first, and the film industry later, began simmering.  For the last 20-30 years, usually during the middle of each new decade, a new phenomenon has been born, destined to uproot the functioning of complete industries. As a matter of curiosity, does anybody have an idea of what 2015 may bring to us?

First the music industry, then newspapers and magazines, and then finally TVs and movies, they all are struggling to cope with the radical changes.  The slowest one to react was the music industry, perhaps because it was the first casualty (forgive me for using the incumbent’s terminology, not the customers’) and there were no examples of how deep, and redefining for the whole industry, the changes brought about by the new digital innovations would be.  That the music industry has lost a full decade is evident since its response to these digital challenges has coincided in time with the newspapers’.  TV and film industries, casualties of the third wave, may be reacting a little faster.

The Film Industry, the Last to Feel the Pinch

From observing the film industry, newspapers can learn the determination to reach audiences however the consumer wants it, in almost any possible format...  Even though things are just starting, we can legally get films online, - rented, purchased or free with advertising, - via multiple devices.  Hundreds of web sites offer movies (Netflix, iTunes, Hulu, Babelgum, Joost, The Auteurs…and long etc).  Other established players in the digital arena have also become digital retailers: Xbox Live and PlayStation Store, Amazon Video on Demand...etc.  You can even watch a movie on your smart phone.  Of course, you can still buy or rent DVDs and watch films thanks to the growing VOD offer of cable and digital platform operators.  Lastly, you can enjoy a film in the most traditional outlet of the business, movie theaters.   

Digital delivery has been growing SO FAST that film studios have identified 250 digital formats. Yes, two hundred and fifty! And now they are trying to reduce costs by agreeing on an interoperable digital master format (IMF) which will also help promote their digital business.  Are studios moving fast enough?  Perhaps the answer is no, but in any case they are moving faster than the music industry and newspapers did.  Now, in how many formats are papers reaching their readers and delivering their content?  Are they expanding their new media reach at a proper speed?  Whatever the answer, newsrooms have to develop their own open technical architecture and be ready to deliver in more vehicles (unfortunately, sales departments are frequently the laggards and end up delaying the whole experiment, but this is another topic).

Lessons from the music industry

On one hand, any internet novice can download songs and bypass the incumbents’ structure to collect royalties. To add insult to injury, the record industry has had to face the stampede of brand-name artists moving away from them (remember Madonna leaving the Warner for Live Nation, a live-events and concert promotion company?) Many others have followed.  In their quest for a proper set of business answers, labels are gathering experience with paid downloads, ad-supported streaming, subscription services, ad-supported and ad-integrated P2P download services…etc. But perhaps most relevant is the music industry’s fierce determination to redefine its role and its artists while at the same time creating links with audiences.

In the past, the record industry was strategically placed in between audiences and artists and supposedly had the talent and experience to decide in the name of the audience which songs/artists had the quality to be recorded.  That paradigm has changed.  Many artists are flying solo.  Instead of focusing on getting the attention of the labels’ execs in order to be chosen to record songs and sell CDs, artists are now getting more focused on getting the attention of their potential fans in order to be able to sell tickets to their shows, to license songs…etc.   Multiple companies and web sites have started to “provide online music business lessons, exclusive video interviews and advice, career and business planning tools and thousands of hand-picked resources designed to help you achieve success in the new music industry” (about us, Music Power Network).

Closer to the audience

The incumbents have understood that revenue from recorded music will continue decreasing and that their activity cannot be limited to seeking out the best singers and bands to sign. Instead, they have to learn new skills, such as mentoring artists to develop their performing style, and hone their public skills to better connect with their potential audiences.  They are becoming business advisors, career planners as well as permanent managers of organized tours and all kinds of live performances, which represent the fastest growing source of income in the industry.

The exhibitionist and theatrical Lady Gaga has learned to be closer to her fan base and be coherent in all her public appearances. Her dominance in the charts has proven her right.  When she received five Grammy Nominations she did not thank anyone other than her “Little Monsters”, aka her fan base. On the scenario, as in any digital format, she has established a solid link with her audience.  To them, she offered her own DNA (some follicles) in her GaGa Fame Monster Bundle, as well as a collectible puzzle, pullout posters, a paper doll collection and a personal note for USD115.

Other artists are finding their own unorthodox methods of reaching audiences’ attention and pockets.

Newspapers need to address new ways of getting to their audiences and interacting with them. From the early formula of posting a comment to a piece of news, to the way the most advanced players are trying to harness the traffic and commercial potential of local bloggers, there is an array of possibilities.

As I have written before, the main strategic areas in a newspaper or a TV are brand/image and content.  From each one of those two areas they have to persevere in reading the consumer’s interest.  The old journalism days of waiting for agencies’ content is (partially) over.  Now, the journalist’s network, his/her roots in the community and ability to scan what the community is interested in, are required skills to add value and differentiate the final product from other local players. Following readers’ interest, via marketing tools, as well as discovering what interests them via social web sites, is a new skill media companies have to turn into a habit.  (End of Part 1)

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Television Could Learn from Newspapers when Going Online (and 6)

To conclude my series of posts on lessons broadcasters could learn from newspapers, I present some comments regarding the human factor.

Online TV skills from outside required

TV broadcasters need a new breed of execs, of content personnel, of technicians, of sales persons…etc.  Training internal resources will only work as long as there is a critical mass of sharp online personnel aboard.  This means that talent and skills will have to come from outside, especially during the early stages.  Later on, the usual flow of TV hires will join the company with that ‘online module’ already built in.  One cannot change the taste of a dish without adding some new ingredients.  The new hires will also help to mold the TV culture to the new times and needs.  

Hire online experts from the best online newspapers teams

Speaking of online skills, web journalists have dealt for many years with many of the issues now affecting broadcasters.  They have experience with the problems of traditional media going online, with its cultural, technical and content challenges, plus they know the difficulty that legacy and new platforms have interacting with each other.  Online journalists have a good understanding of video challenges and may have even experimented with the concept of online TV.  Those managers boast years of practice in handling complex digital operations with massive traffic, especially when compared to the number of unique users of almost any broadcaster.  They understand what drives user behavior and can integrate online trends, such as social media, into the content proposition.  Lastly, their marketers are experts in using statistical, competitor analysis and general market intelligence tools to gain insight into their operation and that of their competitors.  Among their weaknesses, few have relevant experience with DRM (Digital Rights Management).  In sum, do not disregard their experience because, at least to a certain degree, they have done this trip before.  

Do not try “to own” your online TV team during the early stages

Do not suffocate your team by imposing the dominant TV culture.  The existing culture made your channel successful, but it has to be transformed to succeed in the new digital challenges.  A top newspaper exec once told me he hired someone just because he wore a gold ring in his ear.  This is just an anecdote to illustrate that things will be different in an online environment.  Let them act, relate, meet and work as they please, without other preconceptions other than rigorous delivery.  Once the team spirit is built, you will have to bring both cultures closer.  That said, the new media manager should report to the top exec and, in my opinion, be a member of the Steering Committee ASAP.

Allow for active networkers

I apologize for copying and pasting this point from a previous post, but it fits here beautifully: “…pay attention to the networking that takes place within.  The real success of your project will take place if the right networkers are able to operate freely across your established organization. They are the energetic people the organization trusts and relies on.  Regardless of their titles, they move around irrespective of the organization chart connecting people and experience, transforming bits of information into added value.  They are the energizers.  Their enemies are the authority figures who dislike active networkers and hold too high a respect for established channels of communication.  By making sure that loose pieces of information are transformed into solutions these employees will increase the possibilities of success of your project.   Make sure they are not subdued by your “establishment.”  Let there be a certain degree of noise.  Total peace belongs in cemeteries.”  

Be ready to partner as never before

Historically, the agenda of a newspaper executive did not include meeting a lot of outside companies.  Newspaper managers had a simple and consistent work flow.  That changed with the Internet and now their agendas are busy with meetings with vendors and interaction with competitors, players and interlocutors of all kinds.  The company network is much denser. To offer an example, when newspapers started migrating the businesses included in their papers, they realized that in the case of online employment, they lacked critical mass.  Currently, Gannett Co. shares its CareerBuilder web priority with Tribune Co., McClatchy Co. and Microsoft.   

Managers need to become more open, more adept at interacting with many different players in a time efficient way.  The TV set is not the only platform to keep in mind anymore and for every new device to carry the TV content there are agreements to be negotiated and implemented.

Lastly, newspapers did not have many persons working from the outside.  Online changed that.  I foresee that broadcasters will have to excel at streamlining their interaction skills to relate with a larger amount of external teams working for them, peers, vendors and clients in order to contribute to the faster and more complex delivery of the online/mobile. 

You are free to use this article in your publication as long as you credit the author Fernando Samaniego.

Television Could Learn from Newspapers when Going Online (Part 5)

Newspapers wouldn’t rely on movies to build brand

Could you imagine a leading newspaper in which all the content comes from press agencies? In spite of streamlining, papers have reinforced their core competencies.  

For most, it has meant concentrating on anything local or close to the interests of their readers: sports, politics, social events, entertainment…etc.  Some regional papers all but overlook international news on their websites because they know they are building their reputation and traffic on local affairs.

When I travel the world and watch TV, I am surprised by the importance movies have in their programming grids.  Movies do not create a brand; they are not the pillars on which a leading TV channel can build its brand and future.  Movies do not create loyalty, since they are one-off experiences.  Instead, other stations are heavily dependent on programs like The Wire, The Sopranos, CSI, House…even The Simpsons, which seems like a smarter option to movies because the broadcaster has the time to build something around them. 

Until a few years ago, TV watching was a social activity done with the family.  Now it’s an individual activity and if a canned product like a movie can be offered VOD, it will.  Leading news programs, live sports and other events may be expensive, but they show the way forward.  Reality programs, contests, competitions…are cheaper formats.  One can create a series by adapting scripts or formats that have worked in other markets.  They will not be perceived as canned and you can create online layers around them.  Plus they may allow for mobile participation, product placement and create the kind of loyalty you need at the magical moment the viewer picks up the remote.

The fate of free movie channels seems unpromising.  Shrinking audiences, stable cost structure, increasing VOD offerings and decreasing digital costs of transmission will play against them.  In the future, they will be less significant because they lack the ability to generate traffic or interaction. For outside content to be successful, it must integrate with the channel’s own programming.

Make live events live by creating ‘content around content’

Live events suit perfectly the new TV.  They have to be seen live, advertisers love them, sponsorships are possible and product placement, if you own the event, can contribute to the bottom line.  The bad thing is that it’s getting harder/more expensive to land international rights for major events, but there are national and local rights which can also fulfill the needs of some channels.

I cited two examples from the world of sports because sports excel at attracting a loyal crowd of followers.  Gavin O'Malley comments that “among the key age segments of 18-24 years and 25-34 years, the Internet far outweighs both local and national TV coverage as the primary source of sports news and information”. Sports franchises are moving quickly into new media and their experiences could be good case studies for those seeking ways to leverage other live events.

Clearly, a TV organization should try to build on recurring events as much as possible.  It’s a lot easier that one time only events. While securing the rights is hard, once we have them it is absolutely necessary to build content and interest around them.  It is a waste of effort to broadcast an event life as if it is simply a parenthesis in the programming grid.  Only the meticulous generation of a complete environment around the F1 allowed Telecinco to grow its audience.  Likewise, that same “wrapping around the event” approach has to be developed in the online.

First personal note in my blog: I was born in Bilbao an industrial city in the north of Spain, same as Miguel de Unamuno, an essayist and novelist who said that “history could best be understood by looking at the small histories of anonymous people, rather than by focusing on major events such as wars…”  The official history for which you pay for rights is the jewel in the crown, but events also need the “intrahistory” (he used that word), the making of, the interviews and smaller content that maintain the focus and anticipate and prolong the experience.  Around traditional TV and around the website/mobile there has to be a microcosm all along the season, or the time’s length.  Thanks to this multichannel approach. broadcasters and advertisers have the chance to better impact their target audience. There is a Nike ad, which takes full advantage of this “content around content.”  Once again, this is something you cannot buy and which sets you apart from the rest.

Connected TV as a blender

Only a few posts ago, I described the effort of Samsung and Yahoo! to achieve the active coexistence of TV and online.  The time when consumers will have internet-enabled TVs is not near, but experiments will abound to grasp the potential of the new sets.  Just recently, Sony has announced its intention to offer a movie (Cloudy with a Change of Meatballs) for $24.95 available to consumers directly through internet-enabled TV sets.  In the future when such sets are more common, Sony will try to bypass cable and satellite companies with its own VOD services.

Forrester estimates that Internet sets will be in more than one-third of European TV households by 2014 with more than 150 million potential European users in 2014. Advertisers and content providers will have to plan for the transformation of the TV experience to one that blends broadcast and broadband.  There is time, but are most TV channels exploring the merger of traditional and Internet TV?

And now take a glimpse at the future 

Three months ago, nobody imagined a search engine could offer videos from over a thousand sources in a properly categorized way, facilitating a consumer’s immediate access to hundreds of thousands of episodes, movies, web originals, music videos.  Today, that dream can be accomplished via the net.  Forget Google.  The complete guide to the Internet is already available under the name Clicker.com, which does a superlative job of facilitating an infinite world of on-demand choices. “Thousands of episodes from thousands of shows are housed on thousands of different sites, mixed among billions of random clips and videos.” 

Clicker doesn't actually host any of this content, but it provides links to the sources.  Its service is free, but it intends to develop premium features as imdb did. It anticipates the future of convergence and though it poses hundreds of questions, one thing is certain: the time to watch online TV in the living room is constricting. Is your company ready for this?  Are your shows properly described and categorized online, with complete cast and complementary info?  Are they fully searchable under the right tags?  Is your advertising well developed to take benefit from this?  Is there a payment method in place?  Do you have the right approach to SEO?  Can you offer differential videos?

Of course, your programming can be seen on your website, but distribution, or the ability of getting traffic to your content through different doors, is something you have to explore. Clicker is one more door to your house; the largest social networks are other ones.  As editors have learned, try them.  I recommend that your new media team get acquainted with Clicker.com, “the complete guide to Internet Television”, as it is very relevant to your online video business. (End of Part 5)

You are free to use this article in your publication as long as you credit the author Fernando Samaniego

Television Could Learn from Newspapers when Going Online (Part 4)

Downsizing and ratio of market shrinkage

Painful downsizing of TV incumbents is likely, as revenues will not rebound to pre crisis equivalents and online video watching becomes more prevalent.  After decades of easy life, newspapers discovered that the percentage of costs spent in their news operations was a relatively small proportion of the total and for 10 years they have reduced other costs to keep alive.  Eventually, the newsrooms have been affected by the cuts (too often beyond logic).  Similarly, TV channels will have to zero in on all non-essential costs because they are doomed to do more with less.  Revenues will be lower, so costs have to be reduced. The companies that streamline early will be in more control of their destiny, gaining time to focus on their core tasks.

Unfortunately at the end of the process, the size of the market will be reduced.  The total money spent on digital classifieds is much smaller today than the amount previously collected by newspapers.  Let’s not get deceived and think that the pie is just redistributed. It simply doesn’t work like that.  A good part of the revenues will vanish, contributing, as with many industries in the past, to greater efficiency of the economic system, more precisely to the benefit of the users (I’m trying to see the bright side of things).

If we believe Laura Martin, video online is a $700 million market, while "The market cap of the television value chain is $330 billion." I have never read any reports on the ratio of market destruction in the case of newspapers, i.e. how many digital cents (plus whatever is left in print) are left in the market for every newspaper dollar there was there before it all started. As a pure unscientific and wild guess let me say, until better-documented reports say otherwise, that perhaps no less than one third of the market has vanished into thin air (some of my colleagues put it closer to 50%).  If that same 1:3 ratio of reduction repeats itself in the case of broadcasting, the pain will be felt by many.  For others it will be lethal. Be ready for that estimate to be right and rebuild your P&L with the new revenue estimate. Depressing? If it happens overnight, yes. If you have some time to react, just challenging.

Payment needed

Rupert Murdoch said that putting together good content and offering it for free is bad business.  Jeff Zucker, CEO of NBC Universal, put it very simply: we are “exchanging analog dollars for digital pennies”.  If online advertising cannot offset the damage caused by the Internet to print, we can only imagine the suffering broadcasters will go through in a few years.  Their video content is more expensive and advertising will clearly not be enough, at least from today’s perspective.

Advertising will evolve, but simple forms of payment also need to be explored, something editors have been talking about for a long time.  A patent application issued in April regarding micropayments suggests Google will soon be able to process small payments starting from a penny, a good complement to its Checkout payment system.  This is one of those developments a broadcaster has to follow and play with as soon as it becomes available. 

Murdoch declared “we’d rather have fewer people come to the website and pay. It costs us a lot of money to put together good newspapers and good content. No news websites anywhere in the world are making large amounts of money” but the truth is that we may not have to choose between the two, high traffic or charging for content.  The fact that mass media need to remain massive is a tautology.  Media have it built into their genetic code.  In his WSJ, Murdoch delivers both free and premium content, but a proper micropayment system instead of a subscription fee may be the answer for many websites.

When a media exec talks about charging for content, don’t be too critical

Given that across time and media, audience has always being a powerful indicator of the potential of a product, it’s only natural that at the onset, new projects overlook the need for revenue.  From what I understand, the iPlayer doesn’t require proof of license of payment.  Likewise, Hulu is Hulu is doing exactly what Murdoch complained about, delivering good and expensive merchandise for free.  Those projects are honing skills to learn how to deliver the right merchandise the right way.  But at some time, those and other sites need to extract some economic benefits from their audiences.  When someone experiments with charging for content, my recommendation is that the industry  support those steps, because it will mean that a TV business is trying to find its future economic model.  All will benefit.  Even if the formula doesn’t work, criticism is not beneficial. This could be one more lesson from the newspaper industry.

The crusade led by some, Murdoch included, to charge for content is reaping some fruit. Ofcom published recently a report that “more UK adults than before believe that file sharing through downloading shared copies of copyright music and films should be illegal (42%) than believe it should not be illegal (33%), and 25% are unsure. Young people 16-24 are more likely to say that such content should not be illegal (55%)”.  

If video content is not easily available and/or easily payable, users will pirate it. Broadcasters have to realize that the price users are willing to pay for an episode will be a low, I repeat, a small amount of money, something similar to a micropayment.  Premium and live content, such as a football match, will be a different story.   Since Hulu is one of the players exploring how to charge for content, it is one case to earmark for Google alerts. (End of Part 4)

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Television Could Learn from Newspapers when Going Online (Part 3)

Video, mobile, social media, as advertising trends  

There seems to be a consensus that there will be new winners in advertising revenue. Social media is beginning to get its share of the pie and it will likely increase.  On the other hand, the fast evolution of smart phones since the arrival of the iPhone guarantees that mobiles will become a ubiquitous device and an excellent vehicle for advertisers.  Finally, video, heralded for so many years, is starting to live up to its expectations.   

If advertising gurus have it right, the wind seems to be blowing in the right direction for broadcasters because they can benefit from three trends.  The first is video, where the strength of broadcasters is obvious. The second is mobile and there’s not much to say, since the medium is some time away from supporting streaming video. The third is social media.  Broadcasters will have to work harder in this area and regardless, they are not likely to challenge Facebook.  Still, they have the marketing power of their conventional channels. If used to promote good series, sports events or other appealing programs, broadcasters have the ability to assemble online content communities.  In summary, broadcasters will need to keep these three key components of new media in mind if they wish to position themselves for the ad dollars other media players are fighting for.  

Most newspapers were light years away from knowing anything about video, but in the last few years, they have adopted it and adapted to it. They have shown similar will to learn about mobiles and for some years now, their sites have been accessible on mobile phones.  The list of examples to showcase how they are building communities around some types of content would be a long one (Nettby by the daily VG is half the size of Facebook in Norway). Broadcasters have been pushed later to the game, but they will need to move with haste to master the tricks of the trade. 

Get ready for more technically intensive advertising

Keeping up with the fast evolution of advertising in video is an exciting task. Google has announced that it’s going to test a new formula to deliver skippable pre-roll ads with a high degree of acceptance from users and a very high CPM.  “The model will be ‘Cost Per Engagement’, where advertisers would only pay for opt-in engaged views of the ads”.  Once again, Google lifts the bar since few players have the know-how to build such a system. The automated process by which a platform actually acquires the insight to offer a certain ad to the most appropriate audience is a highly sophisticated one, which requires very high traffic and ultra intelligent analytical skills.  Google satisfies both requirements.  In the upcoming years, broadcasters will have to master these skills.  While that may not seem possible now, the future will provide us with more analytical skills and technology, assuming companies have moved in that direction.  You can ask the old Fast Search, now owned by Microsoft, how many editors have become experts at utilizing something formerly so foreign to them.

Database

A database is a collection of logically related records consolidated into a common container that provides data for one or multiple uses. Information can be retrieved, added to, updated or removed in an automatic fashion.  For a long time, editors continued using basic text or even structured text in dealing with the storage of information, but soon databases proved to be much more flexible. Their main advantage is fast and efficient data retrieval while relational databases have the further advantage of allowing administrators to specify how different sets of data relate to each other.

All content can be stored automatically and retrieved for any established or new purpose.  The possibilities for database content are endless, as opposed to content stored in the traditional way.  Acquired video can be presented with or without comments or associated with any other layer.  It can be personalized according to the needs of each user.  Database elements can be combined to produce new content, enlarging inventory of pages.

Sophisticated data base management is becoming a necessity for broadcasters and you do not have to have the expertise of Google to do it.  The challenge is not only about managing and creating new content from existing data, but also about squeezing all the possible information about our users as it regards their Internet usage and ad consumption.  As in the example of Google’s skippable ads that I mentioned before, advertising will become highly sophisticated.  

New media are not about technology but about reaching the consumer.  That art of the communications equation has not changed, but the technological part has become much more important.   (End of Part 3)

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Television Could Learn from Newspapers when Going Online (Part 1)

I think TV broadcasters going digital are moving along a similar path to the one newspapers were forced to take some 10 years ago. Many of their issues run parallel and hence some lessons and solutions encountered by editors may be useful for broadcasters. Strange as it may seem to many, newspapers have been among the earliest adopters of the Internet and among the most successful in terms of traffic since 40% of web users visit newspaper web sites, according to research by Nielsen Online. 

Another media tsunami, 10 years later 

To pick one single player, Craig Newmark in 1995 began in San Francisco with an email distribution list of friends. In 1996, he created a web service called Craigslist.org. By 2001, North American newspapers started to feel the destructive effect of Craigslist and the Internet on their powerful franchise of printed classifieds. Almost monopolistic businesses until then, dailies saw the barriers to entry disappear and their business begin to crumble. In 2005, 10 years after Newmark, the founders of YouTube started their journey and when Google acquired the site in 2006, a new era began to take shape: extended, cheaper and ubiquitous broadband was eagerly adopted by a generation that does not feel the fixed broadcasting times and frequent interruption of advertisers are built for them. A destructive tsunami (from the incumbents’ point of view) will deploy its slow motion awe and it will take years to reconstruct a new business model. Many buildings -brands - will cease to exist and new ones will take their place. The wider broadband penetration as well as decisions to turn off analog signals (FCC’s required exactly that in June, 2009) guarantee that this time broadcasters are to follow suit faster, as will their P&L.

History never repeats itself but sometimes it behaves in a spiral, which adds new elements to a déjà vu story. In this case, it matters to study the common patterns as well as the differences as some solutions may be common to both. 

Some broadcasters are humbled by editors on their own turf… 

I have been surprised by the under developed video experience of some broadcast websites and I am going to say something that may surprise many: some smart print editors offer a better online video experience than larger broadcasting companies. I only mention company names in my blog if it’s for the positive and this time will not be an exception. The Wall Street Journal has developed a video center of high quality. Actually, the project has been largely pushed by the guys from the sales department, since advertisers are keen to use their products. The New York Times or tabloids like The Sun in London have also evolved dramatically. Smaller newspapers like the ones owned by Vocento also offer video experiences largely surpassing equivalent, established TV players. On top of that, most of those newspapers offer extremely well integrated video in their news content offerings. So far, newspapers are being smarter at getting money from the TV players than the other way around. Given that editors were not too successful at scraping money from search, video was a logical way forward. Wooed by the high CPMs they can charge, “News Web sites are starting to look a lot less like newspapers and a lot more like television,” according to The New York Times.

…and most newspapers have more traffic than televisions

I have tracked web traffic on two of the largest TV networks in the U.S. (NBC, ABC) and compared it to newspapers like The New York Times and Wall Street Journal. In reach (% of Internet users who visit them), the newspapers are way ahead (see graph) and the gap doesn’t seem to be narrowing. As expected, the amount of time spent on site by users is very similar. I’d expect the networks to lead in the future, but we’ll have to wait and see. 

As regards page views per user, The Times and ABC are on top, which is a positive since it equals to building advertising inventory. In my last comparison, things change in favor of the networks: their bounce rate (percentage of visitors who "bounce" away to a different site and just visit one single page) is lower. When looking at the keywords being typed in a search engine’s box, it’s obvious that the newspapers do not own or have exclusive rights to the news they feature while the networks do, since users write very frequently the name of the series they want to see.

is simplistic comparison indicates that large dailies are leading in traffic but broadcasters have the possibility to reverse the online status quo. They both see their traditional businesses at risk and are beginning to compete for each other’s advertising budget as never before. At the end of the day, one will be the winner. (End of part 1)

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TV and Internet Merger

Experiments to merge TV and internet have systematically failed but that has not discouraged new players from trying because most pundits believe that the right formula/s will eventually be found.  Previous attempts by Microsoft and Apple seem to point at that moment where the two media will work together through the development of creative formulas still unknown to each of them.  Multitasking, increasing lower third TV screens and the example of online video including support content are some of the trends heralding that moment.

A recent video in the Wall Street Journal showed the latest joint effort by Samsung and Yahoo! to achieve the active coexistence of TV and online.  But as an innovation from previous experiments, the merger has been performed using Yahoo!’s widgets. It has allowed the internet to coexist with the TV programming, and the viewer-user the ability to surf the internet without having to opt out from TV.  Like my first car of some 30 years ago - although the product can be improved, it does the job.

The implications for editors and local portals are not minor.  As time goes by, the site-only strategy will simply not be enough. The past news portals have represented the logical extension of newspapers into the digital era; however the time has arrived for them to open up.   Regardless of the beauty and size of the portals, users need more than merely accessing content through them. We should facilitate their access through doors- as many as possible-, windows, chimney, floor cracks…etc.  Easy to say and hard to do?  Yes, indeed, but a visionary company will slowly travel in that direction by developing easier access to its content: news portal/s, complementary sites, content conceived for mobile, widgets for specific pieces of information, IPod casting, presence in the big sites (YouTube, Facebook…)…etc, and now television.

Away from newspaper-like type of information where the content is mostly textual and long, online editors have to think in terms of data base type of content, ready to be complemented, expanded, commented, reused, searched…etc.  An article published in the paper is less and less relevant in the new environment of the “percolated house” since our products require content elements that can be linked together and repurposed.  A textual description of a new film is a short lived element in a newspaper, whereas the same film description can be formatted from its inception in smaller packages which can be permanently used online to support, for instance, even the movie protagonist’s bio many years later.  Those smaller packages can merge with images and video, they can be part of the skeleton for other sites such as trivia contests, affinity evaluations…etc.  They can be searched, reused, surfed in the PC, mobile…and now, thanks to Samsung and Yahoo! they will be repurposed when that very movie is being shown on TV.

Because of their tremendous content and their position in the cities, newspapers can count on a large network of collaborators. If they are to be the references of the on-goings on in their cities, the ability to gather “evergreen” information in the data base format will present an enormous competitive advantage.